Feb 5, 2011

Asahimas Glass, cheap & robust

Auto and flat glass maker PT Asahimas Flat Glass Tbk (AMFG) has denied a market rumor saying that the company has become a target acquisition of auto maker and distributor PT Astra International Tbk (ASII).
Asahimas' Corporate Secretary Hendrik Adrianto, as quoted by Bisnis.com, confirmed that there is no plan of take-over deal until 2011.
"There was also a denial statement from Astra International. We don't have any plan of corporate action in 2011," he said. 
He said Asahimas prefers to boost an organic business growth and no certain plan to acquire or merge with another company. The company tries to fulfill the financing using internally generated cash flow. "We don't have any plan to draw bank loan facility as well as bond issuance," Hendrik said.
What next?
Asahimas is one of publicly listed companies at Indonesia Stock Exchange which is currently still cheap. With annualized EPS at Rp693.33, Asahimas is now traded at 7.28x. Under current circumstances, it is not easy enough to find a company with cheap valuation.
Despite cheap valuation, Asahimas has better performance than another flat glass maker PT Mulia Industrindo Tbk (MLIA). As cheap valuation and hefty financial performance, it is possible if Asahimas becomes a target acquisition. 
At end of September 2010, Asahimas's net income surged 585.17% to Rp225.63 billion or Rp520 per share from Rp24.39 billion or Rp56 per share. The surge bottom line was a result of higher net sales of 29.55%, while COGS increased 10.71%.
Operating profit jumped 779.39% to Rp303.48 billion from Rp34.51 billion, resulting a steep rise in operating margin to 17,69% from 2.61%. Asahimas's gross profit increased 140.18% to Rp476.18 billion from Rp198.26 billion.
The company posted a 29.55% increase in net sales to Rp1.71 trillion from Rp1.32 trillion at end of September 2009. Asahimas also showed a cash rich of Rp364.19 billion from Rp77.74 billion.
Asahimas' immature receivables to affiliated parties were Rp113.04 billion, while Rp6.42 billion was due within 30 days, and Rp215 million was due within 31-60 days.
Robust financial               
Asahimas's current ratio was 4.54x with current assets of Rp1.08 trillion and current liabilities of Rp239.60 billion. The company didn't record bank loan in its book, hence it wasn't charged with interest.
Japanese Asahi Glass Co Ltd controls 43.86% shareholding in Asahimas Flat Glass, PT Rodamas owns 49.78%, and public shareholders hold 15,36%.   
Rodamas, established in 1955, has been engaged in various lines of business in Indonesia with focus on manufacturing industry and distribution of industrial and consumer products. Rodamas Group, founded by businessman Tan Siong Kie, has important marketing networks, which spread out all over the country, covering several business areas. 
Rodamas business group, which was started as a trading company in the 1950's and focusing its activities as an importer of goods not yet manufactured in Indonesia, has also expanded its business into other domains namely that of industry and consumer goods. 
The activity this time encompasses the construction material, basic chemical, glass, metal, diamond cutting, tools industry, as well as the consumer goods industry, such as sanitary products, food and packaging.
Buyers for Asahimas's products
Asahimas sold Rp388.64 billion of its glass products to third parties and Rp1.33 trillion to affiliated parties. In AMFG's financial statement, there are several affiliated buyers such as AGC Flat Glass Asia Pacific Lte Ltd, Singapore, PT Rodamas, Rodamas Marketing Pte Ltd, Singapore, Auto Glass Co Ltd, Japan, Asahi Glass Co Ltd, Philippine, Asahi Glass Co Ltd, Japan, other buyers. 
 
Disclosure: No position at the stock mentioned above. 
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